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Chiron Says Flu Vaccine Production Falls Short
  Tue Oct 18, 2005 8:07 AM ET
By Deena Beasley
LOS ANGELES (Reuters) - Chiron Corp. on Monday said its U.S. flu vaccine deliveries, and its profit, will fall short of targets yet again this year due to production problems at its British manufacturing plant.
Chief Executive Howard Pien, speaking on a conference call, said the plant would produce fewer than 18 million doses for the 2005 to 2006 flu season, down from the company's previous estimate of 18 million to 26 million doses.
Chiron's plant in Liverpool, England was recently restarted after being shut down due to contamination problems a year ago. That abrupt shutdown cut the U.S. vaccine supply in half.
Despite Chiron's lowered projections, the U.S. Food and Drug Administration said it expected there would be significantly more vaccine produced than last year.
"We ran out of days ... the number of changes we have had to make took us away from being able to produce vaccine," Pien said.
He declined to provide exact targets for 2005 vaccine production or for earnings.
The company said the shortfall will cut net income for the year to less than the 86 cents to $1.11 per share it had forecast and income from continuing operations below its projected range of $1.20 to $1.45 per share.
Analysts on average expect the company to post 2005 earnings before one-time items of $1.22 a share, according to Reuters Estimates.
"No one was really expecting them to do much this year ... Next year is what really matters," said Russ Gilbertson, an analyst at Caris & Co.
Pien said the plant's total capacity for the 2006-2007 flu season will be 40 million doses.
Chiron attributed this year's shortfall to delays related to changes at the plant as well as lower output associated with adapting new processes and procedures.
The company, based in Emeryville, California, said it has begun its first delivery and release of Fluvirin to customers in the United States for the upcoming flu season after receiving approval from U.S. and U.K. health regulators.
Chiron said it expects to continue to deliver shipments of the flu vaccine throughout October and November and into December, but the total number of doses produced will be fewer than it had expected.
Chiron said prices for the vaccine have risen about 20 percent as demand for flu shots increases and U.S. public health authorities push to vaccinate up to 180 million Americans annually.
The company is also working to develop a vaccine against bird flu, but the earliest that vaccine could be on the market would be mid-2007, Gilbertson said.
The FDA said it is committed to working with all influenza vaccine manufacturers to expedite availability of vaccine. "While occasional spot shortages may occur as manufacturers complete their final testing, we expect these shortages to resolve as vaccine continues to be released to health care providers and others who administer the vaccine," the agency said in a statement.
In addition to Chiron, manufacturers distributing flu vaccine this year include Sanofi Pasteur Inc., MedImmune Inc. , and GlaxoSmithKline Plc.
Chiron's shares, which closed at $43.30 on Nasdaq, were slightly lower at $42.80 in after hours trading.
Last month, Chiron rejected as "inadequate" a bid by Novartis AG to purchase for $40 a share the 58 percent of the company it does not already own.
On Monday, Pien's only comment on the bid was that Chiron remains "focused on driving value creation for shareholders."
(Additional reporting by Martinne Geller in New York)
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